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China auto export slowdown stokes capacity concerns

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Bloomberg Beijing

China, where auto plants are running at about 70 per cent of their potential, said vehicle export growth slowed in the first half, stoking concerns about excess capacity in the world’s second-largest car market.

Exports rose 59 per cent to 388,000 vehicles after almost doubling a year earlier, Fu Peizhao, deputy secretary general of Department II for the Machinery Industry at the China Chamber of Commerce for the Import & Export of Machinery & Electronic Products, said in an interview today.

Chinese automakers have boosted exports as investments totaling at least $20 billion by General Motors Corp, Toyota Motor Corp. and other overseas carmakers have helped cause a rising stockpile of unsold vehicles and falling prices in the domestic market. First-half exports also slowed on natural disasters and because of China’s attempt to cool its economy.

 

“Exports are an important channel for automakers to digest excess capacity, especially truckmakers,” said Li Dan, an analyst at China Galaxy Securities Co. in Beijing. “Automakers have expanded quickly because of the domestic sales growth.”

China’s exports of completed trucks rose 46 per cent in the first half to 151,500, Fu said. Car exports doubled to 133,000. The total figure also includes sales of knock-down components and of chasses installed with engines.

The value of total exports rose 85 per cent from a year earlier to $5 billion, Fu said. The average price per vehicle climbed 16 per cent to $12,900. The numbers include vehicles made by overseas carmakers in China.

Cooling Investments :China suffered its worst snowstorms in five decades in January and February, followed by its deadliest earthquake in 32 years in May. The disruptions, coupled with government steps to cool investment, caused the country’s overall export growth to slow by 5.7 percentage points in the first half to 22 per cent.

“Tight monetary policies are making it difficult for automakers to find capital and that led to the decline in exports,” Fu said.

Concerns about excess capacity and falling prices have caused SAIC Motor Corp, China’s largest automaker, to plunge 70 per cent this year in Shanghai trading. It fell 0.6 per cent to close at 7.98 yuan. Sinotruk (Hong Kong) Ltd., the country’s biggest maker of heavy trucks, fell 0.8 per cent to close at HK$7.47 in Hong Kong, extending losses for the year to 38 per cent.

China’s stockpile of unsold vehicles rose about 50 per cent in the six months ended June to a four-year high, the National Development and Reform Commission said last month.

That helped cause average vehicle prices to fall about 3 per cent.

Automakers in China sold vehicles to 193 countries and regions in the first half, with Russia the largest market, according to the Chamber of Commerce for the Import and Export of Machinery and Electronic Products.

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First Published: Aug 06 2008 | 12:00 AM IST

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